3. Amaranth Advisors, $6.5 Billion

Founded in 2000 by Nicholas Maounis, Amaranth Advisors claimed to employ a “multi-strategy approach to investing that allows nimble portfolio managers to seize opportunities in whatever markets seem to be most promising at the time,” according to a 2006 New York Times article. However, the hedge fund’s downfall was largely due to huge losses in a single sector: natural gas. After making $1 billion in 2005 on rising energy prices and owning up to $9 billion in assets under management, the company completely collapsed in 2006 after losing more than $6 billion on natural gas futures, making it the third largest trade loss ever.